Procurement: What factors are important when choosing a supplier?

January 23th, 2020
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When it comes to choosing suppliers, procurement departments rely on a number of qualitative, quantitative, subjective and objective criteria. Since 1991, Weber & Al. have identified three main criteria: price, delivery and quality. However, what other factors do today's procurement departments take into account when choosing suppliers, alongside these essential criteria? Procurious, a network created by and for procurement and supply chain professionals, was particularly interested in this topic, and asked procurement decision-makers about it directly. Two key factors were highlighted during the interviews: commitment and cultural fit.

Factor no. 1 for procurement departments: Commitment

Commitment is a factor that can really make a supplier stand out. This involves being a valuable partner who understands, shares and works to overcome any challenges that their customer might be experiencing.

Chris Cliffe, Director of CJC Procurement, explains this clearly: "For me, the most important thing is relationship fit and you measure that through kind of the intangibles but ultimately, is that supplier engaged in the outcomes that you need from that procurement project and from that contract? If they're engaged in delivering with you and achieving that outcome, that sets them apart from those that are just trying to sell you stuff". 

Factor no. 2 for procurement departments: Cultural fit

Cultural fit means that each entity aligns themselves with the other company's business culture and shares certain values. This makes it easier for them to understand each other and therefore work better together.

Lucy Bunting, Head of Procurement instantly said, "Cultural fit and partnership, and my reasoning behind that is again, I've seen some phenomenal suppliers out there that are incredibly innovative. But actually, if the business is not in a position where they're happy to take on board that risk, it's never going to work". 

Gemma Bell, Head of Purchasing at L'Oréal, added: "I would say that there are lines to your organisation's culture, values and fit so that you're working with an organisation where you can build a long-term partnership". 

Finally, the idea of a relationship hides behind these two factors. As identified in management consulting firm Bain & Company's pyramid of values, aimed at procurement departmentscompanies see these relationship factors as a way to optimise the business relationship. Commitment and cultural fit boost confidence and aid understanding, respectively, ensuring that there is a solid base on which to build a partnership.

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